United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS MELANIE TETHER (of Counsel) Instructed by: Ms J Hogarth Messrs Salans Hertzfield & Heilbronn HRK Solicitors 14-18 Gresham Street London EC2V 7NN


 


JUDGE PETER CLARK: This is an appeal by the applicant before the London (North) Employment Tribunal, Chairman, Mr M S Rabin sitting alone on 8th April 1998, against that Chairman's decision to stay his Originating Application to the Employment Tribunal pending the outcome of High Court proceedings brought by the first respondent, Kroll Associates UK Ltd ["Kroll"], against, among others, the applicant, Mr Crichton-Miller. That decision, with extended reasons, was promulgated on 24th April 1998.

The tribunal complaint

In his Originating Application the applicant raises the following claims:

1. pay in lieu of notice;
2. an expenses claim;
3. a claim for commission for the year 1996 in the sum of about £11,000;
4. a claim for bonus for the period ending 12th November 1997, totalling £23,808; or alternatively, a claim based on an alleged agreement with solicitors acting for Kroll for payment of £15,000 in full and final settlement of that bonus claim.
5. A claim to entitlement to certain share options arising out of his employment contract with Kroll.

In the Originating Application he brought each of those claims by way of a claim for breach of contract and unauthorised deductions from wages.

By a document dated 8th April 1998 and headed "Applicant's Proposed Directions" he identified his cause of action in respect of claims numbers 1, 2 and 5 above as being for breach of contract; claim 3 by way of a claim for unlawful deductions and claim 4, as to bonus, by way of unlawful deduction and as to the alleged settlement agreement with the solicitors for Kroll by way of a claim for breach of contract.

By their amended Notice of Appearance, leave to amend having been granted by the Chairman on 8th April 1998, Kroll denied the claims and sought to counter-claim in respect of the applicant's claims for breach of contract damages claimed in the High Court action brought by Kroll.

The High Court proceedings

Kroll issued a writ claiming damages and rescission of certain termination agreements against three senior employees/directors of Kroll, and against the applicant as fourth defendant damages for breach of his fiduciary duty owed to Kroll. The central allegation, set out in a statement of claim served in the High Court proceedings, was that the four defendants had, in breach of their fiduciary duties owed to Kroll as employees/directors set up a competing business using knowledge gained as a result of their relationship with Kroll.

In his defence to that claim the applicant denied any breach of duty and pleaded, at paragraph 14 of the defence, in the alternative, a set off in respect of his claims for breach of contract and unlawful deductions in the tribunal proceedings. Paragraph 14 reads:

"14. If, which is denied, Crichton-Miller is liable to make any payment to Kroll, Crichton-Miller will seek to set off in extinction or diminution thereof his claim for breach of contract and unauthorised deduction from wages which he had brought in the London North Industrial Tribunal case Number 2200129/98."

The tribunal decision

The Chairman concluded that there was an overlap of issues between the High Court and the Employment Tribunal proceedings and that findings of fact by the tribunal, particularly in relation to the applicant's claim for notice monies and Kroll's counter-claim for damages might embarrass the High Court when hearing the High Court action by reason of the application of the principle of issue estoppel. That reason alone, in his view, outweighed the factors in favour of permitting the tribunal complaint to proceed first. Accordingly, he granted the stay sought by Kroll in relation to all claims brought in the tribunal proceedings.

The Appeal

Ms Tether has limited this appeal, originally made against the total stay, to the Chairman's decision to stay the applicant's claims for unlawful deductions only, that is, the commission and bonus claims.

She submits that there is no overlap between those issues and the issues raised in the High Court proceedings.

We cannot agree. One of the defences to the bonus claim in the tribunal proceedings, by way of amendment to the Notice of Appearance, is that the bonus scheme was discretionary and that Kroll was entitled to exercise its discretion not to award a bonus by reason of the applicant's alleged of fiduciary duty. It is that alleged breach of duty which is central to the High Court proceedings.

Ms Tether argued that the tribunal ought to try as a preliminary issue the question of whether or not the bonus scheme was discretionary and if it found that it was, then adjourn the bonus claim until after the High Court proceedings. We regard that as an unsatisfactory way of proceeding, and certainly it was not the way that the matter was put below.

Ms Tether accepts that the breach of contract claims, that is claims 1, 2 and 5 before the tribunal, are properly stayed. It will be a matter for the applicant whether he adds those claims by way of counter-claim in the High Court proceedings. Equally, it is his case that he was contractually entitled to the commission claimed. It seems to us that claim may also be added in the High Court proceedings. If he fails on that contractual claim he is then entitled to pursue an unlawful deduction claim under the wider definition of wages to be found in s. 27(1)(a) of the Employment Rights Act 1996. See Kent v Butterfield [1992] ICR 272.

Next the applicant, although not as yet counter-claiming in the High Court proceedings, has raised all of the claims, both breach of contract and unlawful deductions made in the tribunal proceedings by way of set off in paragraph 14 of his defence in the High Court proceedings. Accordingly, it seems to us that the applicant himself has raised the very same issues in the tribunal proceedings in those High Court proceedings.

Thirdly, it seems to us, undesirable that the claims in the tribunal proceedings should be heard piecemeal. That was not the way the Chairman was invited to deal with the matter and we find such a suggestion unattractive on appeal.

Fourthly, we bear in mind the limited circumstances in which it is open to this tribunal to interfere with a Chairman's exercise of discretion in granting or refusing a postponement under Rule 13(7) of the Employment Tribunal rules of procedure. See Carter v Credit Change Ltd [1979] ICR 908. Ms Tether submits that in accordance with the Wednesbury principles, the Chairman here has fallen into error in failing to take into account a relevant factor, that is that there is no overlap between the unlawful deduction claims and the issue raised in the High Court proceedings.

For the reasons which we have given we do not accept that submission. Particularly in relation to the bonus claim. But in any event, we repeat, the Chairman was not asked to deal with the matter on this piecemeal basis and, in our view, there are no good grounds for interfering with his exercise of discretion on the facts of this case.

In all the circumstances, at this preliminary hearing stage, we are satisfied that the appeal raises no arguable point of law to go forward to a full hearing and accordingly it must be dismissed.